Multiple choice

A sum of money with compound interest amounts to Rs. 133100 in 3 years and Rs. 161051 in 5 years. What is the rate of compound interest per annum?

  1. 7%

  2. 10%

  3. 13%

  4. 15%

  5. 17%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In compound interest, amount = P(1 + r/100)^n. For year 3: P(1+r/100)^3 = 133100. For year 5: P(1+r/100)^5 = 161051. Dividing gives (1+r/100)^2 = 161051/133100 = 1.21. Taking square root: 1+r/100 = 1.1, so r = 10%. Check: if P = 100000 and r = 10%, then year 3 = 100000 × 1.331 = 133100 ✓ and year 5 = 100000 × 1.61051 = 161051 ✓

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